As businesses gear up for the future, AI is becoming increasingly significant, yet many companies remain unprepared to fully harness its potential. Despite the hype surrounding artificial intelligence, recent surveys show a disparity between the perceived importance of AI and its actual implementation in HR functions. Surprisingly, only a small percentage of organizations are investing in AI for HR outcomes, with even fewer planning to boost these investments in the near future. This discrepancy is largely due to fragmented HR tech stacks, insufficient in-house knowledge, and the absence of practical use cases. Therefore, 2025 presents a timely opportunity for HR teams to streamline their technology stack and maximize the benefits of AI.
1. Assess Your Current HR Technology Stack
The first crucial step in decluttering your HR tech stack involves conducting a detailed inventory of all HR-related solutions, applications, and systems across your organization. This process should include not only the systems officially under HR’s control but also any shadow or home-grown systems and those managed by other departments. It’s essential to identify every tool being used, even those that seem insignificant at first glance. By casting a wide net, you ensure no stone is left unturned, giving you a comprehensive understanding of your current tech landscape.
During this inventory process, particular attention should be paid to overlapping systems and areas of redundancy. It’s not uncommon for different departments to use multiple solutions that serve similar purposes. These redundancies increase complexity and cost while providing minimal additional value. Identifying overlaps will help streamline your tech stack and reduce unnecessary expenditures. Moreover, understanding the full scope of your technology usage will enable you to make more informed decisions when it comes to optimizing and integrating AI later on.
2. Rank Existing Systems by Importance
Once you have a complete inventory, the next step is to assess the importance of each system within your HR tech stack. Determine the priority of each tool based on its relevance to the company’s mission, HR goals, and workplace culture. Consider how each system contributes to key business objectives, such as employee engagement, productivity, and talent management. This ranking will help you focus on systems that are integral to your organization’s success and eliminate those that are redundant or less impactful.
After establishing the priority of each system, evaluate whether these highly prioritized tools meet at least 70% to 80% of your current and anticipated business and workforce needs. This assessment helps identify gaps where existing systems may fall short and where new solutions may be necessary. Analyzing the effectiveness of your current systems also provides a benchmark for measuring future improvements, ensuring that any changes made to your tech stack align with your organization’s strategic goals.
3. Review Contract Durations and Solution Roadmaps
With a clearer understanding of your existing systems and their importance, it’s time to review the contract durations and solution roadmaps of these tools. Analyze the length of current contracts, especially for systems that have overlapping functions. Understanding the remaining contract periods allows you to plan for renegotiations or replacements systematically, avoiding costly penalties and disruptions.
Additionally, examine the future roadmaps of your current solutions to determine whether they can meet evolving business requirements. A solution that fits today’s needs may not be equipped for tomorrow’s challenges. Therefore, reviewing vendors’ planned updates, enhancements, and long-term development strategies is crucial. This forward-looking approach ensures that your HR tech stack remains adaptable and ready to support your organization’s growth and innovation.
4. Examine Vendor Market Position and Partnerships
The next phase involves evaluating where your vendors stand in the current market and their partnerships in terms of services and technology. A vendor’s market position can significantly impact the quality and reliability of their solutions. Vendors that are well-established and have a strong market presence are more likely to offer robust and innovative products. However, newer or smaller vendors might provide cutting-edge solutions and more personalized support.
Assessing vendor partnerships is equally critical. Effective partnerships drive integration and functionality across different systems, enabling seamless data flow and comprehensive reporting. Ensure that your vendors have multi-tiered partnerships that support integrations with other essential tools in your tech stack. This depth of partnership is necessary to create a cohesive and efficient HR technology ecosystem that leverages AI and other advanced technologies.
5. Decide on Adopting a Cluster Model
Once you have gathered and analyzed all the relevant information, consider whether adopting a cluster model is suitable for your organization. A cluster model revolves around an anchor system, a core solution that meets a significant percentage of your company’s needs and serves as the foundation of your tech ecosystem. For example, an HRMS or a payroll system may act as the anchor in some organizations, while others might use a time-tracking or skills management system based on their specific requirements.
When an anchor system lacks certain functionalities, instead of replacing it entirely, you can deploy “satellite” solutions that address specific needs and integrate deeply with the anchor system. This approach alleviates the pressure of finding a perfect all-in-one solution that often doesn’t exist. A strategic cluster model reduces the size and complexity of your HR tech portfolio, shrinks integration and data cleaning costs, and simplifies contract negotiations.
6. Thoroughly Evaluate Vendors for Cluster Compatibility
Should your organization decide to adopt a cluster model, a thorough evaluation of vendors for cluster compatibility is vital. Investigate the depth of your prospective vendors’ technical and service partnerships. Multi-tiered partnerships enhance integration, offering more comprehensive support and functionality. Ask vendors about their integration platforms, certifications for partners, and support services to ensure they meet your integration requirements.
Verify the certification processes and training available for partners. Well-defined certification and training programs indicate a vendor’s commitment to maintaining high standards of integration and support. Furthermore, assess whether the vendor’s partnership model accommodates smaller companies or emerging technologies that might offer innovative and cost-effective solutions.
7. Formulate Detailed Vendor Selection Criteria
Finally, develop detailed selection criteria that delve into various aspects of system data, including importing, exporting, storage, integration, and security. This meticulous approach ensures that the chosen solutions align with your organizational needs and technical requirements. Engage in transparent discussions with vendors about your immediate partnership expectations and future needs, supported by comprehensive documentation and real-world examples.
These in-depth conversations and evaluations will help you select vendors that not only meet your current requirements but also future-proof your HR tech stack. Detailed vendor documentation and roadmaps become critical tools in these discussions, providing clarity and confidence in your selection process.
More data, better HR tech integrations, innovation-ready
As companies prepare for the future, AI’s significance is rising, yet many businesses are still not fully equipped to harness its potential. Despite the buzz around artificial intelligence, recent surveys reveal a gap between its perceived importance and actual implementation within HR functions. Surprisingly, only a small fraction of organizations are investing in AI for HR, with even fewer planning to increase their investments soon. This gap primarily stems from fragmented HR technology stacks, a lack of in-house expertise, and the absence of practical use cases. Consequently, 2025 presents a timely opportunity for HR teams to streamline their tech stacks and make the most of AI. By addressing these challenges, businesses can unlock AI’s full potential to optimize HR outcomes, improve decision-making, and enhance employee experiences. Adopting AI in HR can lead to more effective talent acquisition, retention strategies, and overall better organizational efficiency, setting the stage for future growth and success.